Nancy Thorner is a writer, cellist, and Tea Party activist based in suburban Chicago who writes regularly for Western Free Press, Illinois Review, and The Heartland Institute's Freedom Pub blog. Nancy is active in the following organizations: The Heartland Institute, Phyllis Schlafly Eagles, Illinois Family Institute, Family-Pac, Republican Assembly of Lake County, and the Women's Republican Club of Lake Forest/Lake Bluff.

According to the U.S. Census Bureau, Illinois averaged more than 40,000 permits for new single-family houses per year prior to the so-called Great Recession. Compare that to 2016 when Illinois issued just over 10,000 single-family houses permits. The 75% drop observed is the worst in the nation.

But why are other states doing better? Consider Iowa, where teachers don’t have the out-of-control retirement plans provided to teachers in Illinois. Further, Illinois is experiencing one of the largest population losses in the nation. It remains suspect to build more housing in areas facing a declining population.

Property taxes, however, remain the biggest detriment to homebuilding in Illinois. With some of the highest property taxes in the nation, homebuilders are shackled by this burden along with other taxes and fees levied on construction until the property is sold.

All these issues were the focus of Heartland Institute’s recent forum, Why Illinois is the Worst Place to Own a Home. The evening’s presentation featured radio talk show host Dan Proft, who focused his comments around out-of-control government spending and exceedingly high property taxes that plague counties throughout Illinois.

As an aside:

An article posted at Illinois Review on June 14, 2017, explains why a tax plan announced by Republican state lawmakers calling on a four year freeze to property taxes to coincide with the four-year income tax hike. Yet, additional taxation is a bad solution to the Illinois’ budget crisis. The plan was presented by Republicans as the latest and best chance to reach bipartisan consensus in the near future. However, freezing property taxes would create a property tax “freeze” time bomb in a few ways.

The plan freezes property taxes for four years to coincide with the four-year income tax hike.

The Republicans’ plan will fail to help struggling homeowners. Illinoisans shouldn’t have to pay billions of dollars of extra income tax just to get a freeze on the highest property taxes in the nation.

And the freeze isn’t absolute. Local debt service payments are exempted from the freeze, meaning homeowners’ taxes could still rise.

Three areas of Illinois in regard to Property Taxes

1. South Side homeowners are suffocated by property taxes:

Back in 1961, duplex units at Pacesetter Gardens advertised a “town and country location” just 23 minutes from the Loop. The community had a “Cabana Club” complete with a recreation center, a “big, L-shaped outdoor swimming pool,” a snack bar and a bath house. The units started at $19,000 ($150,613 inflation-adjusted) as of 2015. By 2015, the median home price in Riverdale was just $51,800, a third of what it was 54 years ago and down 62 percent from 2007 ($137,172 inflation-adjusted). Local Government Information Services, a newspaper chain Proft co-founded, reports Riverdale’s effective property tax rate (ETR) in 2015 was 7.61 percent, for a median bill of $3,942, the second-worst of fifty south suburbs.

Rich Township High School District 227 raised spending three percent from 2007 to 2015. That’s while operating three high schools at less than half of their capacity all while student enrollment in the district has fallen steadily– more than 17 percent in the last four years alone. During these spending increases, home prices continued to fall.

2. Homeowner equity in DuPage County is eroding quickly even as property taxes soar:

In January 2007, the average Willowbrook home was worth $305,000. Eight years later in January 2015, values are at just $182,000. That’s a fall of 48 percent in real, inflation-adjusted, dollars. Willowbrook happens to be the worst of 29 communities in DuPage County.

Driven by surging local government spending and massive municipal debts, homeowner equity in DuPage County is eroding quickly even as property taxes soar. The net result: property taxes are pressured higher and higher, and property values lower and lower.

Hinsdale home prices fell 25 percent from 2007 to 2015. But over the same period, Hinsdale School District 181 raised its local property tax levy by 20 percent, to $65.23 million. It spent $17,217 per student in 2015 — up from $12,924 in 2007 ($14,733 inflation-adjusted).

Elmhurst home prices also fell 25 percent. But Elmhurst District 205 kept spending, raising its bill to Elmhurst property taxpayers to a record $111.4 million, up 15 percent over the same period.

3. Soaring taxes are having a major impact on Lake County property values:

Cross Lake, 89 acres in size, straddles the Illinois-Wisconsin border has been greatly effected by soaring taxes. It’s western shore spans two adjacent communities, Antioch, Illinois and Trevor, Wisconsin, where a continuous development of modest lakefront homes makes the state line essentially indistinguishable.

Whether in Illinois or Wisconsin, the homes on Cross Lake look no different; however, in Trevor, a 1,368 square-foot two bedroom, two bath sold in fall 2015 for $255,000. Seven docks, or a three-minute walk south across the state line, a 2,400-square-foot, three-bedroom, three-bath at 143 Lakewood in Antioch sold last spring for $225,000.

Why would a home 75 percent larger with more bedrooms and bathrooms sell for $30,000 less? It is because of property taxes. The Wisconsin home is valued higher because its tax bill is so much lower. At $3,202 per year, it’s about half what their Illinois neighbor pays— $6,211 per year— just across the state line.

Every Lake County community saw its home values fall significantly all while rising property taxes compounded the pain.

The rise was driven, in large part, by steady increases in local school district spending, which make up 70 percent of a typical property tax bill. While Lake Forest homeowners saw their property values fall 23 percent, Lake Forest’s Roundout School District 72 increased spending by 29 percent over the same period when adjusted for inflation. Mundelein School District 120 raised spending 17 percent while Mundelein homeowners saw their home prices fall an average of 32 percent. Libertyville District 70 raised spending 15 percent while its homeowners saw their home values fall 23 percent.

In 2015, effective property tax rates in 41 of 43 Lake County communities were higher than 2.45 percent. An effective property tax rate is calculated by dividing what one pays annually in property taxes by their home’s value. The average rate in Lake County is 3.3 percent, twice the national average (1.31 percent) and more than three times the average rate in neighboring Indiana (0.88 percent). In 20 Lake County communities, it was higher than 4 percent.

If home prices fall at the same pace, homeowners in 14 Lake County communities will have paid more than their home’s full value in property taxes over the previous 16 years of ownership.

Proposed Reform Through Referendum

Proft believes that Illinoisans are ready for reform, that a revolt is real, and it only has to be stoked. Mirroring Indiana, Proft wants to impose a 1% hard cap on property taxes as a percentage of home value until a capital event such as home improvement or the home is sold. A home owner’s defense association will be formed to inform homeowners of their property tax situation.

There are also plans to place an advisory referendum ballot question on the 2018 election ballot so Illinoisans can come out to express their views. Unlike what has happened in other states where revolts have taken place, Illinois has failed to elect conservative reform leaders in Springfield to reign in the spending.

Youtube video of Dan Proft’s comments: “Why Illinois is the Worst State to Own a Home”